The revelation came quietly, almost as an afterthought, during an interview with Bloomberg News on the sidelines of an OPEC event in Vienna. Bayo Ojulari, the Group Chief Executive Officer of the Nigerian National Petroleum Company Limited (NNPCL), let slip what many Nigerians have suspected for decades but successive governments refused to admit: that the country’s struggling and moribund refineries may finally be sold off. “What we are saying is that sale is not out of the question,” Ojulari said explaining that “All the options are on the table.”
The timing of this revelation, coming hot on the heels of Aliko Dangote’s grim assertion that Nigeria’s refineries may ‘never work again’, has left the nation in stunned silence. Yet, in this moment of brutal honesty, the Tinubu administration has shown a rare flicker of political courage, daring to nurture an idea that past governments buried under denial and inertia. For once, there is no sugarcoating the truth: these refineries, long reduced to monuments of waste, may finally be offloaded in what could be the most consequential, and controversial energy sector reform in decades.
In that unguarded moment, the NNPCL boss confirmed what audits and investigative reports have shown for years, that Nigeria’s refinery system has become an unsustainable drain on national resources, consuming $18 billion in turnaround maintenance funds while producing nothing but frustration.
This admission opens yet another sad chapter in Nigeria’s decades of refinery tragedy, another story that exemplifies institutional failure. The numbers tell their own damning story. Between 2010 and 2020 alone, Nigeria spent $3.4 billion maintaining facilities that operated at less than 10% capacity. The Port Harcourt refinery, which gulped $1.5 billion in its latest failed rehabilitation attempt, last operated at full capacity in the 1990s. Meanwhile, Aliko Dangote spent $20 billion of private funds to build a 650,000-barrel-per-day refinery that will soon meet all of Nigeria’s domestic fuel needs and create export capacity. The painful comparison speaks volumes, where decades of government management produced only decay, private enterprise delivered a world class facility in five years.
The rot runs deeper than mere incompetence. Forensic audits reveal how refinery maintenance became one of Nigeria’s most lucrative rackets. Take the 2014 contract awarded to Italy’s Maire Tecnimont for Port Harcourt’s rehabilitation, $1.5 billion disbursed, yet engineers on site reported that less than 30% of the work was completed before the contractors demobilized. Or the infamous 2021 TAM project where contractors collected 10% mobilization fees upfront ($180 million across all refineries) only to abandon sites after preliminary surveys.
NEITI’s 2022 report exposed how maintenance budgets were systematically looted through phantom contracts and inflated invoices, with one notorious example showing $32 million paid for “specialized valves” that were never installed. These were not isolated incidents but part of an entrenched system where refinery budgets served as political slush funds, with successive petroleum ministers treating them as patronage reservoirs.
The consequences of this failure have rippled through Nigeria’s economy like a slow acting poison. With domestic refineries producing mostly promises rather than petrol, Nigeria became trapped in the absurd cycle of exporting crude oil only to reimport refined products at premium prices. Central Bank records show the country spent $23.3 billion on fuel imports between 2019 and 2023, a hemorrhage of foreign exchange that destabilized the naira and drained reserves. Worse still, this dependence birthed the notorious fuel subsidy regime, which between 2006 and 2022 consumed N13.7 trillion according to PPPRA data – more than the combined budgets of education and healthcare during those years.
The 2012 parliamentary probe led by Farouk Lawan uncovered industrial scale fraud, with marketers claiming payments for 59 million litres of fuel daily while actual consumption barely exceeded 35 million litres. The scam grew more brazen over time – in 2019, the Nigerian Navy intercepted twelve foreign flagged vessels that had collected $300 million in subsidy payments for fuel they never delivered, simply sailing in circles off the coast of Lome while paperwork showed them discharging in Lagos.
Against this backdrop of systemic failure, the Dangote refinery emerges as both rebuke and revelation. Where Nigeria’s state refineries took five years just to complete feasibility studies for rehabilitation, Dangote’s team built Africa’s largest refinery from scratch in the same timeframe. The contrast extends beyond construction, while NNPCL struggles with 5,000 overstaffed and under skilled workers across its refineries, Dangote trained 30,000 technicians at its Lekki training academy, many recruited from the same communities where state refineries failed. Most tellingly, Dangote invested $2.5 billion in dedicated pipelines and marine infrastructure to bypass Nigeria’s notorious distribution bottlenecks, while NNPCL’s pipelines remain vulnerable to vandalism despite $800 million annual “security spending”. The private project’s success underscores a bitter truth: Nigeria’s refining crisis wasn’t inevitable but the direct result of choosing political control over operational competence.
Yet for all this bleak history, Ojulari’s comments hint at a possible turning point. The proposed sale of the Port Harcourt, Warri and Kaduna refineries could represent Nigeria’s best chance to break this cycle of failure, provided the government learns from past mistakes. Global precedents offer cautious optimism. When Brazil’s Petrobras sold eight refineries in 2021 under pressure to reduce debt, private operators increased capacity by 40% within two years while reducing operating costs by 60%. India’s 1990s deregulation birthed Reliance’s Jamnagar complex, now the world’s largest refinery hub, which ironically exports fuel to Nigeria today. Even Angola, long held up of oil mismanagement, successfully privatised its Luanda refinery in 2022, ending its reliance on imports. These cases share common threads: transparent bidding processes, strict performance clauses, and regulatory frameworks that incentivize investment over asset-stripping.
Privatisation offers several potential benefits that could finally address Nigeria’s energy crisis. Functional private refineries would eliminate the FX drain from fuel imports, ease pressure on the naira, and create a competitive market to drive down pump prices – a major contributor to Nigeria’s 33.2% inflation rate.
The Dangote refinery’s imminent operations prove private capital can succeed where government has failed, and multiple functioning refineries could finally provide the stable fuel supply that has eluded Nigeria for generations. A competitive landscape with players like Waltersmith’s modular refinery, Niger Delta Petroleum’s upcoming 100,000bpd facility, and revived state refineries under professional management could replicate the success of Nigeria’s telecoms sector, where privatisation transformed NITEL’s ruins into Africa’s most dynamic mobile market.
However, the shadow of Nigeria’s disastrous 2013 power sector privatisation looms large over these plans. That exercise, which handed distribution companies to politically connected but technically incompetent investors, left Nigerians paying more for worse electricity service. To avoid repeating this failure, any refinery sale must include stringent performance clauses, enforceable recommissioning timelines, and clear penalties for non-performance. The process should attract genuine technical partners, perhaps international oil companies with refining expertise, rather than becoming another patronage exercise.
Transparency in the sales process will be crucial to avoid the corruption that has plagued Nigeria’s oil sector for decades. The government must resist the temptation to impose artificial price controls, allowing market forces to determine fuel pricing while strengthening the Midstream and Downstream Petroleum Regulatory Authority to prevent monopolistic practices.
The human cost of this decades-long failure is often lost in the statistics. Nigerian households and small businesses have spent trillions powering generators due to erratic electricity partly caused by refinery failures. Transport costs inflated by unstable fuel prices have made food more expensive, the National Bureau of Statistics estimates that transportation accounts for 35% of food inflation. Entire industries have relocated to neighbouring countries with reliable energy; the Manufacturers Association of Nigeria estimates that 32% of its members have either scaled down operations or moved to Ghana and Cameroon since 2020 due to energy instability. These are the real consequences of preserving broken systems rather than embracing necessary change.
As the government deliberates this long overdue decision, it must recognise that this is not merely about selling assets, it’s about finally solving a problem that has crippled Nigeria’s economy for generations. The $18 billion wasted on maintenance, the $23 billion spent on imports, the N13.7 trillion lost to subsidies – these staggering sums represent what failure costs. The Dangote refinery proves what success looks like. Between these two paths, the choice should be clear. After sixty years of dysfunction, Nigeria’s refineries don’t need more government money – they need government to finally let go.
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